Burberry Sales Beat Expectations Giving Fresh Boost to LuxuryBy
Asia Pacific unit returns to growth while U.K. sales rose 40%
Luxury goods maker follows Richemont in beating expectations
British trenchcoat maker Burberry Group Plc said business in Asia-Pacific returned to growth and it enjoyed an “exceptional” boost at home in the U.K. as the lower pound drew shoppers, the second positive sign in a week for Europe’s struggling luxury-goods industry.
Third-quarter retail revenue rose 4 percent on a currency-neutral basis, the London-based company said Wednesday, beating the median analyst estimate for a 3 percent gain. Bags were particularly strong after Burberry introduced products such as the Bridle model, which sells for as much as 16,000 pounds ($19,740).
The results will bolster optimism that the luxury business may have bottomed out after Cartier owner Richemont reported a return to growth last week. Burberry said its Asia Pacific division had a sales gain in the low single digits, marking a rebound for its largest unit which had been struggling for growth as demand ebbed. U.K. sales rose about 40 percent as sterling’s weakness after the Brexit referendum boosted tourist spending.
The stock rose 1.6 percent to 1,618 pence at 10:47 a.m. in London.
Highlights of the quarter included a record number of views of the company’s Christmas ad and strong demand for new products, Chief Executive Officer Christopher Bailey said in a statement. Bailey is due to hand over the reins to Marco Gobbetti in July and will return to steering Burberry’s creative direction as part of a management re-shuffle that also includes a new finance chief, Julie Brown, who started on the job Wednesday.
Other third-quarter highlights included:
- Total sales of 735 million pounds topped the 721 million-pound estimate
- Mainland China had high single-digit percentage comparable sales growth, Hong Kong improved to low single-digit percentage decline
- Americas showed low single-digit percentage decline
- No change to guidance for retail, wholesale and licensing revenue
- Company expects full-year pretax profit to be in line with market expectations